“When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients,” Buffett said in his annual letter to shareholders.

“Both large and small investors should stick with low-cost index funds,” he added.

Buffett, 86, used his investment savvy to build Berkshire into a powerhouse conglomerate and become the world’s second-richest person. Known to fans as “the Oracle of Omaha,” he estimated that the search for outperformance has caused investors to “waste” more than $100 billion over the past decade.

On Saturday, he called Vanguard Group founder Jack Bogle “a hero” for his early efforts to popularize index funds.

Berkshire itself has done far better, with its stock price gaining 20.8 percent per year since Buffett took over in 1965, dwarfing the Standard & Poor's 500's .SPX 9.7 percent gain, including dividends.

Yet Buffett said most stock investors are better off with low-cost index funds than paying higher fees to managers who often underperform.

In 2014, Buffett said he plans to put 90 percent of the money he leaves to his wife Astrid when he dies into an S&P 500 index fund, and 10 percent in government bonds.

During the financial crisis, Buffett bet a founder of the asset management company Protege Partners LLC $1 million that a Vanguard S&P 500 index fund would outperform several groups of hedge funds over years.

The index fund is up 85.4 percent, Buffett said, while the hedge fund groups are up between 2.9 percent and 62.8 percent.

On Saturday, Buffett said he has “no doubt” he will win the bet. He plans to donate the money to Girls Inc of Omaha.

While Buffett said no pension funds or “mega-rich individuals” have taken his advice on index funds and that “human behavior won’t change,” some investors are following his lead.

Despite a roaring stock market in the United States, actively managed mutual funds bled $342 billion last year, their second straight year of outflows.

But Tim Armour, CEO of Capital Group Cos, which runs the American Funds and invests $1.4 trillion, said index funds can expose investors to losses when markets turn sour. The funds are one of Berkshire’s biggest investors.

“We don’t dispute the data that has led Mr. Buffett and others to form their views,” Armour said in a statement. “However, a fairly simple fact has gotten lost in the debate. Simply put, not all investment managers are average.”

LITTLE TO SAY ON TRUMP, SUCCESSION

Berkshire on Saturday also said fourth-quarter profit rose 15 percent from a year earlier, as gains from investments and derivatives offset lower profit from the BNSF railroad and other units.

Berkshire also owns dozens of stocks including Apple Inc (AAPL.O), Coca-Cola Co (KO.N), Wells Fargo & Co (WFC.N) and the four biggest U.S. airlines, and more than one-fourth of Kraft Heinz Co (KHC.O).

This year’s letter and Berkshire’s annual report gave no clues about who will succeed Buffett as chief executive officer, a question shareholders and Wall Street have speculated about increasingly in recent years.

But Buffett lavishly praised Berkshire executive Ajit Jain, widely considered a leading CEO candidate, for smoothly running much of the conglomerate’s insurance businesses.

Jain joined Berkshire in 1986, and Buffett put him in charge of National Indemnity’s small, struggling reinsurance operation.

Since then, Jain has “created tens of billions of value for Berkshire shareholders. If there were ever to be another Ajit and you could swap me for him, don’t hesitate. Make the trade!”

Berkshire, which became one of the top 10 Apple investors in 2016, has gained about $1.6 billion on its Apple investment after shares of the iPhone maker surged.

Berkshire’s airline investments suggest that Buffett has overcome his two-decade aversion to the sector after an unhappy - though, he has said, profitable - investment in US Air Group.

Buffett, a vocal supporter of Hillary Clinton, did not mention U.S. President Donald Trump by name in his letter.

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But he did, however, talk up the vibrancy of U.S. society and its inclusion of immigrants, one of the most polarizing issues under the Trump administration. And he said the future of American business and markets is bright.

“From a standing start 240 years ago - a span of time less than triple my days on earth - Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.”

Reporting by Trevor Hunnicutt and Jonathan Stempel in New York; Editing by Jennifer Ablan and David Gregorio